Tuesday, January 22, 2013

Two years ago in the first half of 2011, the DJIA was trading roughly 1000 points below where its stands today. Yes the DJIA has gained around 1000 points in 2 years. to be more specific, the Dow Jones Industrials peaked at 12,876 on the week of 2 May 2011. Today's close is 836 points above that price.

So in 20 months the DJIA has gained 836 points peak-to-peak.

The Nasdaq Composite is a mere 256 points higher in that same 20 months.

To be sure its a "win" for market bulls. But the cost of that maintained elevated market has taken its toll on the Fed's balance sheet and the balance sheet of the US treasury.

But as I have always said, the markets are never wrong. Its meant to be. But what are the waves telling us?

Wave Structure the last 20 months.
Simply put, the primary call here is that the market is in a huge ending diagonal triangle bigger than anything the market has ever seen. And that means when its finally over, prices will collapse as a result. The "pushing" and prodding of prices has resulted in an overlapping rising wedge shape.

Primary Counts:
The wedge can be counted probably 2 ways as it stands. I prefer the first count as its the true ending diagonal wedge count versus the second.

Conclusion

Yay, congrats for social mood hanging in there and managing to keep things "chipper" in the face of an ever growing disconnect from Nature's Laws. Japan just now introduced their version of "QE Forever" today (as if they already hadn't) thereby joining the ECB and FED in "unlimited" support. Yet now that most central banks are officially declared "all in" and not getting much juice out of the market anymore (as looking over the last 20 months), one wonders.

Ending diagonals can end on an orgy of a price spike over the upper wedgeline. At this point there will be no bears anywhere willing to short anything. Thats probably when the bottom drops out of course.

Two years ago in the first half of 2011, the DJIA was trading roughly 1000 points below where its stands today. Yes the DJIA has gained around 1000 points in 2 years. to be more specific, the Dow Jones Industrials peaked at 12,876 on the week of 2 May 2011. Today's close is 836 points above that price.

So in 20 months the DJIA has gained 836 points peak-to-peak.

The Nasdaq Composite is a mere 256 points higher in that same 20 months.

To be sure its a "win" for market bulls. But the cost of that maintained elevated market has taken its toll on the Fed's balance sheet and the balance sheet of the US treasury.

But as I have always said, the markets are never wrong. Its meant to be. But what are the waves telling us?

Wave Structure the last 20 months.
Simply put, the primary call here is that the market is in a huge ending diagonal triangle bigger than anything the market has ever seen. And that means when its finally over, prices will collapse as a result. The "pushing" and prodding of prices has resulted in an overlapping rising wedge shape.

Primary Counts:
The wedge can be counted probably 2 ways as it stands. I prefer the first count as its the true ending diagonal wedge count versus the second.

Conclusion

Yay, congrats for social mood hanging in there and managing to keep things "chipper" in the face of an ever growing disconnect from Nature's Laws. Japan just now introduced their version of "QE Forever" today (as if they already hadn't) thereby joining the ECB and FED in "unlimited" support. Yet now that most central banks are officially declared "all in" and not getting much juice out of the market anymore (as looking over the last 20 months), one wonders.

Ending diagonals can end on an orgy of a price spike over the upper wedgeline. At this point there will be no bears anywhere willing to short anything. Thats probably when the bottom drops out of course.

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I like to chart and I am an avid student of Elliott Wave Theory. I combine wave theory with standard technical analysis to track market movements and predict future movements.
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